Open Text (NASDAQ:OTEX) Announces Earnings Results

Open Text (NASDAQ:OTEX) (TSE:OTC) released its earnings results on Thursday. The software maker reported $1.23 EPS for the quarter, topping analysts’ consensus estimates of $1.02 by $0.21, Briefing.com reports. The firm had revenue of $1.33 billion during the quarter, compared to analyst estimates of $1.29 billion. Open Text had a net margin of 12.26% and a return on equity of 25.80%. The business’s quarterly revenue was up 2.9% compared to the same quarter last year. During the same quarter in the previous year, the business earned $0.97 EPS.

Here are the key takeaways from Open Text’s conference call:

• Core and cloud growth remained solid: Q4 core revenue rose 3.1% in constant currency, while core cloud revenue increased 8.9%; enterprise cloud bookings grew 24.1% year over year and 64 cloud deals exceeded $1 million.
• Management expects each of its four core businesses to grow in fiscal 2027, with core revenue projected to rise 2%–3% and core cloud revenue 8%–10% in constant currency. The company highlighted Aviator AI adoption, noting that deals incorporating Aviator are more than four times larger.
• Fiscal 2027 will be a “foundation year” requiring $100 million–$200 million of investments, primarily in sales capacity, partner enablement, R&D, cloud, and AI; adjusted EBITDA margin is therefore expected to decline to 32%–33% from 36.3% in fiscal 2026, while free cash flow is guided to $625 million–$725 million.
• OpenText reduced debt by $649 million in fiscal 2026, bringing net leverage down from 3.02x to 2.75x, within its historical target range. The company also renewed its share-repurchase program for up to 10% of its public float, although management said debt reduction and organic investment are the higher priorities.
• Management is conducting a broad enterprise assessment covering go-to-market execution, portfolio composition, R&D, marketing, operating structure, and talent, with a multi-year strategic plan expected in early calendar 2027; potential divestitures remain under review but will not be pursued at distressed prices.

Open Text Stock Down 2.8%

Shares of NASDAQ:OTEX traded down $0.72 during trading on Friday, hitting $24.94. 3,148,540 shares of the company were exchanged, compared to its average volume of 1,655,615. The stock has a market cap of $6.04 billion, a price-to-earnings ratio of 9.67 and a beta of 1.03. The company has a current ratio of 0.94, a quick ratio of 0.94 and a debt-to-equity ratio of 1.56. Open Text has a fifty-two week low of $19.77 and a fifty-two week high of $39.90. The firm has a fifty day moving average price of $23.05 and a two-hundred day moving average price of $23.61.

Open Text Increases Dividend

The business also recently declared a quarterly dividend, which will be paid on Friday, September 18th. Shareholders of record on Friday, September 4th will be paid a $0.28 dividend. This is a positive change from Open Text’s previous quarterly dividend of $0.28. This represents a $1.12 dividend on an annualized basis and a yield of 4.5%. The ex-dividend date is Friday, September 4th. Open Text’s dividend payout ratio is 53.66%.

Institutional Trading of Open Text

A number of hedge funds have recently modified their holdings of OTEX. CIBC Private Wealth Group LLC bought a new stake in shares of Open Text during the third quarter worth approximately $33,000. WealthCollab LLC lifted its holdings in Open Text by 39.5% during the 2nd quarter. WealthCollab LLC now owns 1,640 shares of the software maker’s stock worth $48,000 after purchasing an additional 464 shares during the last quarter. Osaic Holdings Inc. lifted its holdings in Open Text by 108.8% during the 2nd quarter. Osaic Holdings Inc. now owns 1,798 shares of the software maker’s stock worth $52,000 after purchasing an additional 937 shares during the last quarter. EverSource Wealth Advisors LLC boosted its stake in Open Text by 39.7% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 2,005 shares of the software maker’s stock valued at $59,000 after purchasing an additional 570 shares during the period. Finally, Barclays PLC boosted its stake in Open Text by 55.5% in the 4th quarter. Barclays PLC now owns 1,854 shares of the software maker’s stock valued at $60,000 after purchasing an additional 662 shares during the period. Institutional investors and hedge funds own 70.37% of the company’s stock.

More Open Text News

Here are the key news stories impacting Open Text this week:

• Positive Sentiment: Fiscal Q4 EPS of $1.23 exceeded the $1.02 consensus estimate, while revenue of $1.33 billion topped expectations of $1.29 billion. Revenue increased 2.9% year over year, cloud revenue rose 6.0% to $503 million, and adjusted EBITDA increased 26.8%. OpenText Reports Fourth Quarter and Fiscal Year 2026 Financial Results
• Positive Sentiment: Scotia maintained a “sector outperform” rating and sees substantial potential upside, although it reduced its price target to $33 from $40. Citigroup also raised its target to $28 from $25, implying more modest upside, while retaining a “neutral” rating. Analyst Ratings
• Positive Sentiment: OpenText announced a quarterly dividend of $0.28 per share, representing an approximately 4.4% annualized yield. The dividend may support the stock’s appeal to income-focused investors.

Analyst Ratings Changes

Several equities analysts have recently issued reports on OTEX shares. Weiss Ratings restated a “hold (c-)” rating on shares of Open Text in a research report on Wednesday, June 24th. UBS Group upped their price objective on shares of Open Text from $25.00 to $27.00 and gave the company a “neutral” rating in a research report on Friday. Wall Street Zen downgraded Open Text from a “buy” rating to a “hold” rating in a research note on Saturday. Scotia decreased their target price on Open Text from $40.00 to $33.00 and set a “sector outperform” rating for the company in a research note on Friday. Finally, Royal Bank Of Canada lowered their price target on Open Text from $30.00 to $27.00 and set a “sector perform” rating for the company in a report on Friday, May 8th. Three equities research analysts have rated the stock with a Buy rating and eleven have assigned a Hold rating to the company’s stock. According to MarketBeat.com, the stock has an average rating of “Hold” and an average target price of $32.46.

Open Text Company Profile

Open Text Corporation is a Canadian enterprise information management (EIM) software company that develops solutions for organizations seeking to manage, protect and extract insight from their unstructured and structured data. The company’s platform encompasses document management, records management, digital asset management and archiving, enabling companies to govern information across its lifecycle.

Open Text’s product suite includes content services, business process management, customer experience management, analytics and security products.